StatoilHydro deal in Tanzania

By Erik Hagen
Norwatch

Norwatch visited Tanzania in October to investigate a series of Norwegian businesses in the country. After Norwatch had left the country, the Tanzanian newspaper This Day printed an interview with Norwatch.

The story contains a number of errors as to what Norwatch has found out and done in Tanzania. Norwatch was never interviewed by This Day, nor of any other journalists in Tanzania, and has not said what is stated in the article.

The new StatoilHydro agreement in Tanzania covered Block 2, a deep water block offshore the southern parts of the country. StatoilHydro is operator of the block.

StatoilHydro’s media relations manager, Kjersti Morstøl, told Norwatch that the company according to the agreement, will carry 100% of the exploration expenditures and risk. If the company makes a commercial discovery, Tanzanian Petroleum Development Corporation (TPDC) has rights to participate in joint operations with a 10 percent participating interest.

The production sharing agreement is, according to StatoilHydro, based on a standard agreement that Tanzania is using. The Tanzanian government’s income from the block will be determined later, depending on the production of the block.

Normally, such agreements mean that low production gives a smaller percentage of the income to the government. Large production could give a percentage higher than 50. On top of this come royalty and tax. Similar models are, according to StatoilHydro, used in countries such as Angola, Nigeria and Indonesia.

StatoilHydro says that the agreements get a different shape in Norway, where higher levels of taxation are used in stead of production sharing agreements.